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Determining the market interest rate

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Reference no: EM133114064

Two bonds are available for purchase in the financial markets. Bond A is a $1000 par value 3 year bond with an annual coupon rate 9%. Bond B is $1000 par value 4 year zero coupon bond. The current yield to maturity on both bonds and market interest rate is 11%.

A) The price of Bond A is :

B) The price of Bond B is:

C) The calculated duration on Bond A is:

D) The calculated duration on Bond B is:

E) What would be the impact on the current price AND duration of both bonds if the market interest rate increase to 12%.

Reference no: EM133114064

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